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Market Entry Strategies: How Foreign Businesses Can Invest in Tanzanian Market (part 1)

When a foreign company decides to enter the Tanzanian market, it has many opportunities. These opportunities vary in terms of cost, risk, and the degree of control that can be taken over them. In severe economic downturns, many foreign enterprises try to reduce expansion costs.

Nonetheless, there is often a huge promise of opportunities for foreign businesses that can identify and grab opportunities amid downturns.

This blog post series provides high-level guidance on some of the most important initial legal considerations that foreign businesses must consider when launching operations in Tanzania- the largest East African country with a population expected to reach 100 million people in 2035 and 200 million by the end of the century, according to the World Bank.

Although not all of the factors described in this series will be met, there is a good possibility that some will, and if they are not appropriately addressed, they will impede or disrupt business activities or arrangements.

Whether the proposed mode of representation is permitted by Tanzanian law and/or practice is important when determining the most appropriate mode of representation when expanding to the Tanzanian market.

Finding a distributor or an agent in Tanzania is a straightforward and relatively easy approach to arranging for representation for foreign-manufactured goods.

To achieve more control, a foreign manufacturing company must register as a separate legal entity with the Company Registry at the Business Registration and Licensing Agency (BRELA) in order to establish a corporate presence in Tanzania and acquire market production capacity.

Although a distributorship agreement is less complicated to set up than forming a separate legal entity, the foreign manufacturing company may lose control over how its products are marketed and priced in Tanzania.

Competent Tanzanian authorities must register, certify, or license before producing, importing, distributing, or selling anything in Tanzania.

The Tanzania Bureau of Standards (TBS) prohibits a person (natural person or business entity) from using a standard mark recognized and registered by the TBS on its products unless the person obtains a license granted in line with TBS-framed standards: Standards (Certification) Regulations, 2009.

Furthermore, under the Standards (Compulsory Batch Certification of Imports) Regulations, 2009, an importer of products covered by Tanzania Standards must apply for the Batch Certificate at least seven days before the arrival of the import shipment in Tanzania.

It is recommended that a foreign business determine the applicable Tanzanian laws, rules, guidelines, and institutional authorities governing quality supervision, inspection, quarantine, certification, accreditation, and registration with respect to its specific industry.

Suppose a foreign business manufactures medicines or medical devices, for example. In that case, the Tanzanian Ministry of Health and the newly formed Tanzania Medicines and Medical Devices Authority (TMDA) are the authorities to contact to see if a registration, certification, or license requirement exists for that particular medicine or medical device.

Tanzania has enacted the Finance Act No. 8 of 2019, which amends the Standards Act of 2009 to require all food importers to register with the Tanzanian Bureau of Standards (TBS) before food may be imported into the nation.

Every entity in Tanzania has specified business objectives that cover the entire range of commodities or services that the entity is required to produce or supply. These purposes are spelled out in the company’s registration paperwork (such as the memorandum of association for a company).

The goals should be carefully considered to ensure that future operations in Tanzania do not go outside the scope of the entity’s mission. If an entity’s goals do not closely match the ISIC—the international reference classification of productive activities—BRELA will not authorize its registration.

Similarly, a foreign company entering the Tanzanian market through a distributor should be aware of the distributor’s business objectives, which may be indicated in its registration paperwork, to avoid the distributor importing and distributing products that are not within its mandate.

How Shikana Group can help

Shikana advises clients on the appropriate ownership structure for the business they want to set up, including corporations, partnerships, limited liability companies, and joint ventures. We analyze the benefits, costs, and risks associated with the choice of a particular business entity based on our extensive experience assisting foreign investors coming into the African marketplace. We also provide a full range of services related to immigration and labor law, including liaising with relevant Government authorities for work permits, investor permits, and related matters.

Our legal consulting firm uses our unmatched experience to deliver efficient and transparent legal and investment advisory support for our clients.

Our legal consulting firm offers services in the following domains:

  • International trade and taxation
  • Commercial and business law 
  • Compliance
  • Venture Capital and Private Equity advisory services

Contact us for legal advice you can believe in.

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